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Wednesday, October 17, 2012

Emanuel to Slash Teacher Pensions

In his
annual budget address last week, Chicago Mayor Rahm Emanuel launched a campaign
attacking the pensions of teachers and other public sector workers. In the
speech, he threatened that property taxes would have to rise 150% if pensions
were not reigned in, as pension costs would soon eat up 22% of the city’s
budget, the WSWS
reported this week.

Emanuel did
not release any concrete details about the plan, but his Roadmap to Retirement
Security, released in May, included a ten-year freeze on cost of living
increases, a 5% increase in employee contributions, a five-year increase in the
retirement age, the imposition of private plans (like 401Ks) for new hires, and
no increase in the city’s contributions until the system is “reformed.”

Illinois state
legislators are in agreement that pension costs must be slashed, but have been
unable to enact any changes due to political fighting and maneuvering. The Democrats want to transfer financial
responsibility to local school districts, something Emanuel has supported since
Chicago is currently the only city that funds its own teachers’ pensions (the
Chicago Teachers’ Pension Fund). Thus, Chicago taxpayers currently pay twice,
once for their local teachers’ pension fund and again, through state taxes,
toward the state fund.

Republicans
oppose this plan because it would shift the burden to suburban and rural
districts, many of which they control. According to the Illinois Policy
Institute, shifting the pension costs onto the districts would increase their
expenditures by 3.7%. This could lead to massive spending cuts, which would
likely result in layoffs, increased class sizes, reduced course offerings and
other cutbacks that directly affect children.

Emanuel’s
plan is part of a larger national movement to impose austerity on working
people by increasing their share of the tax burden and decreasing the services
and benefits they receive in return. Illinois is one of the battleground states
for this movement. The credit ratings agencies have given the state the 2nd
lowest rating in the U.S. (after California) and have demanded pension “reforms”
as a necessary step toward restoring their credit rating. According to the
WSWS, the Chicago Board of Education also had its credit rating lowered because
of pension costs.